WME and its private equity partner Silver Lake were zeroing in on an agreement late Tuesday to acquire IMG, the talent and sports marketing and management agency.

A formal deal could be announced as early as Wednesday.

After a months-long period of courtship and bidding, sources said the pricetag for IMG would be around $2.3 billion. After fielding a second round of bids late last week, sources indicated that the IMG bankers, Evercore and Morgan Stanley, focused on the WME-Silver Lake combo because it was the highest of the three offers submitted by last Friday’s deadline. The other contenders, Chernin Group with CVC Capital and ICM Partners with Carlyle Group, were said to have bid just under $2 billion.

Even on the high end, WME-Silver Lake’s offer is far below the $2.7 billion initially sought by IMG parent Forstmann Little. Forstmann Little bought IMG in 2004 for $750 million.

If a deal is completed, the acquisition would be transformative for WME, expanding the agency’s size and scope far beyond Hollywood into international sports marketing and event production business as well as sports talent representation. IMG’s various divisions have 3,500 employees and earnings of about $160 million.

But an IMG sale also comes with a hefty amount of debt, pegged at about $750 million, and how that will be paid out as part of the transaction may be one of the biggest sticking points as the sides try to come to terms.

Silver Lake is already an equity investor in WME. An acquisition of IMG would deepen the business relationship between the showbiz heavyweight and the tech-focused equity firm.

A rep for IMG declined comment Tuesday, as did WME.

The prospect of WME and Silver Lake acquiring IMG raises questions about how the deal would affect the ownership of WME. Silver Lake at present owns 31% of WME, but agency insiders have repeatedly stressed that the equity firm has no role in managing the percentery’s day-to-day business. It’s unclear how the IMG acquisition would be structured — whether as an outright merger with WME, or a different construct that keeps WME distinct from IMG.

Observers said an outright merger is likely given that Silver Lake will likely seek to drive cost savings and consolidate administrative functions wherever possible.

IMG is active in the talent representation business — for such clients as Justin Timberlake and numerous sports stars — but traditional agenting activity is said to account for only about 10% of the company’s total revenue. WME’s interest in the company is driven by IMG’s various operations in sports management and event production — everything from handling marketing and sponsorship deals for college sports team to repping sports rights deals and venue naming rights in the U.S. and overseas.

WME’s largest rival, CAA, is already active in the sports biz, repping a raft of top athletes, coaches and personalities. CAA built up its sports chops during the past decade with a number of high-profile agent defections from IMG. More recently it has expanded into marketing, sponsorship and TV rights negotiations — something it sought to expand through its pursuit of IMG in tandem with its private equity partner, TPG.

But CAA-TPG were bounced out of the IMG auction in mid-November when its initial bid came in below that of WME-Silver Lake and the other contenders. As the second-round bidders got a deeper look into IMG’s books, there has been much dismay about the state of the company’s disparate operations in the U.S. and abroad. Some familiar with the books assert that WME-Silver Lake will be overpaying at $2.3 billion.

WME’s interest in expanding in sports is a sign of the times for Hollywood agencies. Although content is king in the digital era, huge paydays for movie stars and TV creators are feeling the pinch of the changing media landscape. WME was created just four and a half years ago by the merger of William Morris Agency with Endeavor in a bid to give both percenteries a more diversified base and become more competitive with CAA. An IMG acquisition would give WME even more breadth to go head-to-head in an arena that CAA has staked out as a big driver of future growth.

Once private equity money began flowing into WME and CAA, there has also been speculation that an IPO will be on the horizon for one or both agencies. The combo of WME and IMG would provide a broader revenue base that would make a public offering more appealing to investors.

IMG insiders have been preparing for a sale for more than a year. There’s little doubt that a WME-Silver Lake acquisition would lead to significant restructuring and probably layoffs.

There’s also continued speculation that there could be further horse-trading of IMG assets even after the initial auction is completed.

IMG was famously founded in 1960 on the strength of a handshake between golfer Arnold Palmer and lawyer Mark McCormack. IMG made its mark, and its millions, by negotiating eight- and nine-figure contracts and endorsement deals for such former clients as Tiger Woods, Derek Jeter and Joe Montana. It also produces a host of tournaments, sports events and television programming tied to events it handles.

The company’s future has been up in the air since McCormack’s death. Under Forstmann Little, IMG expanded its marketing and rights representation business, which is one of the most attractive businesses to WME-Silver Lake and the other suitors.